Less than a month after U.S. Rep. Pete Session voted for the GOP's sweeping overhaul of the federal tax system, the Dallas congressman pushed back Thursday on one of the bill's most controversial provisions, asking his colleagues in the House to dump a provision that could cost U.S. university students thousands of dollars each. Sessions wants a section requiring tuition waivers to be taxed as income taken out of the tax plan as House members and senators work out the differences in their chambers' versions of the bill.
“It is no secret that student loans are already crippling our young leaders, and this tax would add to this growing epidemic,” Sessions said in a statement. “Instead of penalizing students who want to get ahead and gain an edge in their fields, we should be providing them more opportunities to be successful.”
Tuition waivers are given to students, typically graduate students, as part of financial aid packages. In exchange for helping with research or teaching duties, a school waives a portion or all of a student's tuition. Students never see a dime of the money, but the Republican tax plan would require them to pay federal income taxes on the amount of tuition they aren't paying. Students in many competitive Ph.D. programs could be forced to report thousands of dollars in additional taxable income.
According to data from the National Association of Graduate-Professional Students, a grad student receiving an in-state tuition waiver and a teaching stipend, worth about $24,000, would pay an extra $2,400 in taxes per year. At MIT, where tuition is more than $37,000 per year, a student with a waiver could owe as much as $10,000 in taxes. In all, the change would affect 145,000 graduate students and 27,000 undergraduate students, according to the American Council on Education
"A repeal of the income exclusion for graduate tuition waivers would harm our nation's students, undermine our competitive position and hold back economic growth," Sessions wrote in a letter to congressional leaders that has been signed by 32 members of Congress. "We strongly urge you to ensure that this harmful provision is not in the final version of the Tax Cuts and Jobs Act."
Texas Rep. Kevin Brady, chairman of the House Ways and Means Committee, said during a speech last week at the American Enterprise Institute that the decision to tax tuition waivers was about "getting down to the bones of the tax code." On Thursday, he told reporters in Washington that he was willing to re-examine the provision during the tax bill's conference process.
Rep. Lloyd Doggett, an Austin Democrat on the tax bill's conference committee, said Tuesday that he was committed to dumping extra taxes for grad students after a student protest at the University of Texas.
"Challenging weather didn't prevent a large protest at UT against the GOP tax hike on grad students, who play a vital role for Longhorns, as others do for Bobcats & Roadrunners," Doggett tweeted. "They have my support as a tax bill conferee as I aim to eliminate at least a few sorry provisions."
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